S&P 500 Dips in October Amid AI Trade Concerns
The S&P 500 declined 0.9% in October as investors questioned AI sustainability, though equal-weighted stocks saw their largest monthly gain since April.
The S&P 500 closed October with a 0.9% decline, marking its second straight month of losses. The dip resulted from rising oil prices driven by U.S.-Iran tensions and growing investor skepticism regarding the sustainability of the artificial intelligence trade.
Despite the benchmark's decline, the equal-weighted version of the S&P 500 rose 4.9%, its strongest monthly performance since April. Bespoke Investment Group noted that this divergence represents the best relative performance for the average stock compared to the market cap-weighted index since April 2009, and the second-best since 1990. The gap emphasizes the index's heavy concentration in a small group of technology and AI stocks, which now account for 37% of its total market capitalization.
Tom Lee, head of research at Fundstrat, maintains a bullish outlook despite the recent volatility. He predicts the S&P 500 could exceed 8,200 by the end of the year.
